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"The words of my book nothing, the drift of it everything."
Walt Whitman

Hospitality businesses are becoming increasingly creative in their marketing, not only to win new business, but also to maintain relationships with loyal customers. On June 6, 2017, Kyle-Beth Hilfer will moderate and speak at Restaurant Law University. In her presentation on branding, she will discuss the legal implications of various branding and marketing techniques. Below are two examples.

Curated Content

Curated content is omnipresent in social media marketing. For example, an hotelier may aggregate images of luxurious sunsets to inspire travelers and run those images on its social media. A restaurateur may embed video of celebrations, photos of food-inspired trends, or critic reviews on its own pages.

As the business develops its website and social media content, it should remember that sourcing content from the Internet is dangerous. Copyright myths abound. Google Images is not a free library. Possession does not yield copyright ownership. There is no 10% or 20% rule that allows one to take a certain percent of content and use it without a license. This is particularly the casefor commercial purposes. Finally, the fair use defense requires significant legal analysis. It may not be available depending on the facts.

Practice Tips:

  • Marketing teams move swiftly to engage the public with relevant and on trend content. They need an internal system for legal vetting to ensure they are not violating any copyright, trademark, or other proprietary rights.
  • User-generated content from consumers can expose a company to legal liability for embedded intellectual property infringement.
  • The legal advisor should develop a set of guidelines for curating content based on the client’s marketing practices.
  • Investigate with your legal counsel whether and how to qualify for a Digital Millennium Copyright Act safe harbor.

Loyalty Programs

Loyalty rewards programs have been challenged under a plethora of laws. One potential flashpoint for litigation may come under the Consumer Review Fairness Act of 2016. This legislation protects people’s ability to post reviews online. As of March 14, 2017, the Act prohibits contractual provisions that: bar or restrict the ability of a person who is a party to that contract to review a company’s products, services, or conduct; impose a penalty or fee against someone who gives a review; or require people to give up their intellectual property rights in the content of their reviews.

Practice Tips:

  • Since hospitality businesses’ success are linked to customer reviews, review loyalty programs’ and website’s terms and conditions.
  • Examine loyalty programs’ point system for compliance with gift card and trading stamp laws.
  • Review all marketing practices, such as mystery gifts, free offers, or swapping testimonials for points, to mitigate risk pursuant to FTC guidelines and state laws.
  • “Drip pricing,” the practice of advertising one price to lure in a consumer, but then adding on features along the way, may create legal risk. Resort fees are particularly under fire in the hospitality business.

Attend  Restaurant Law University for a closer look at branding, while also learning about corporate set up, buying/selling a restaurant, franchising, licensing, employment, and leasing.

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The Federal Trade Commission (FTC) has been watching social media influencer marketing campaigns particularly carefully. In the modern world of social media marketing, the line between acceptable business practices and illegal deceptive speech can be blurry. The government agency wants to ensure that consumers are not manipulated with endorsements and testimonials that brands have “bought.” In the first quarter of 2017, the FTC went on the prowl on Instagram to find influencers and brands whose posts may be violating the law. In April, the FTC sent over ninety letters to companies and some celebrity and other social media users, reminding them of the legal requirements for clarity in their influencer marketing.

The FTC has been regularly enforcing its Guidelines for Endorsements & Testimonials and DotCom Disclosure Guides for years. In fact, as recently as 2016, New York settled with Machinima and three other companies for their deceptive endorsements, with penalties of $20,000-$50,000 for each company. The FTC also settled with Machinima over similar charges later in the year. Right on the heels of that case, the FTC announced a consent order with Lord & Taylor. Nonetheless, ambiguity and deception, according to regulators, seem pervasive in social media marketing, particularly when it comes to influencer endorsements.

In August, 2016, the watchdog group Truth in Advertising (TINA) complained to the FTC that the Kardashian family and various brands were engaging in deceptive influencer marketing.  had over 100 posts online endorsing products without proper disclosures. In fact, these family members could be paid up to $300,000 for a single endorsement. TINA’s complaint alleged that the companies sponsoring the Kardashian posts and perhaps the family members themselves were duping consumers by not disclosing the material connection between the brands and the Kardashian clan.

It is possible that the FTC’s latest series of warning letters were in response to TINA and other consumer groups who have asked the FTC to investigate influencer activity on Instagram. The FTC has stated repeatedly over the last several years that social media posts should be crystal clear whether an influencer has been paid, received free products, or any other material inducement for his post. The agency’s April letters dig into Instagram, as a representative example of space-constrained advertising. The agency offers specific recommendations about how to make disclosures on Instagram that will ensure consumers understand when they are seeing paid endorsements.

The mere presence of a disclosure may not be enough to satisfy the FTC. Keeping with well-established principles enumerated in previous guidelines and case law, the FTC offers three suggestions for clear disclosures, using Instagram as a case study:

  • Instagram posts are typically up to three lines long followed by the clickable link “more”. Any disclosure should be placed before the “more” button since many consumers will not click through.
  • If the post contains multiple hashtags, links, or tags, marketers should be certain to separate the legal disclosures to make sure they are clear and conspicuous.
  • If an influencer includes “Thanks [Brand]” or #sp or #partner, these notations may not clearly indicate to the consumer that the post is sponsored. While the FTC has been clear that there are many acceptable ways to make disclosures, it explains that any term that has many interpretations will not provide the appropriate clarity.

The FTC’s letters indicate its continued vigilance regarding influencer marketing. Typically, the FTC moves on, after a period of time, from education to enforcement. State AG’s also have been active in this area, and consumer watchdog groups are clearly stirring the pot.

ACTION STEPS TO TAKE:

Now is the time to review your brand’s

  • influencer marketing strategies
  • social media campaigns on Instagram and other platforms
  • advertising disclosure mandates
  • influencer training programs
  • agency contracts and responsibilities
  • influencer contracts
  • internal procedures and stakeholders for social media posting

 

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The “sharing economy” seeks to empower consumers by freeing them from the burdens of ownership. The savvy CEO may wonder: How can the collaborative crowd distinguish counterfeit product from my trusted trademarked or copyrighted products? How can my company remain profitable when consumers eschew new branded goods and services? In fact, the CEO should take comfort in knowing that […]

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If it’s May in New York, it’s time for SURTEX. If you are an artist who licenses your art, you should be planning a trip to New York for the self-proclaimed “marketplace for original art and design.” The SURTEX show can be daunting for newcomers due to its size and scope. While your focus now may be […]

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